Trust deeds are a viable solution for consumers struggling with unsecured debt. Clients must be residents of Scotland. Individual voluntary arrangements, however, are available to residents of England, Northern Ireland, and Wales. Individual voluntary arrangements are quite similar to trust deed agreements, and both produce the same result.
Affordable payments are a positive aspect of this type of agreement. Your signature on a trust deed requires you to make the monthly payments for a four-year period. If any debts remain after the four-year term, they are written off and you are debt-free. Nothing else is required of you.
Only Unsecured Debt
Trust deeds include only unsecured debt. Any secured debt you have will be evaluated as essential and included in your budget ahead of your unsecured debt. One example of a secured debt not included in trust deed agreements is mortgages. Additionally, the trust deed is arranged and completely handled by the insolvency practitioner you hire. The practitioner takes on the role of trustee and handles all communication with your debtors.
You provide the practitioner with details about and control of your assets. Therefore, you want to ensure that you hire a trusted practitioner that has been counted on by many clients to deliver the right results. Fill in the blanks for the practitioner about your personal finances, and he or she will take care of the rest.
Keep Your Home
While mortgages are not included in a trust deed agreement, equity in your home is taken into consideration. While the agreements do scrutinize mortgages to a degree, most people end up being able to keep their homes. The same can be said for personal cars, especially if they are not luxury vehicles.
Your practitioner is going to determine what you’re able to afford in terms of the monthly debt payment. Once the trust deed is drawn up, the document is proposed to your creditors. If your practitioner is able to get three-quarters of the creditors to agree to the trust deed proposal, then everything is good to go.
Practitioners charge their own fees, and those expenses will be taken out of your monthly debt payment.
Trust Deed Protection
If everything goes according to plan, your trust deed is protected. A protected trust deed prevents creditors from coming after you regarding unresolved debt or unpaid interest. In fact, the creditors are prevented from taking action in court against you as well.
You must, however, hold up your end of the deal. Otherwise, you could lose your assets, and you could be looking at sequestration. In fact, creditors could force this reality on you.
It is obvious that meeting your monthly payment obligations is your chief focus when entering this type of agreement. With the agreement in place, you are protected. Fail to make your payments on time, and you lose that protection. While trust deeds may not be for everyone, they are a popular solvency option for quite a few people in today’s world.
Trust Deed Pros
Trust deed agreements certainly come with their benefits. Clients no longer have to deal with creditors personally when a trust deed agreement is in place. With one regular monthly payment addressing all outstanding unsecured debt, clients find debt loads to be more manageable and life more stress-free. And after four years, clients are debt-free, whether there is a remaining balance or not.
Trust Deed Cons
The Register of Public Insolvencies is naturally going to have a record of your arrangement. Furthermore, the trust deed agreement is going to be listed on your credit report for a period of six years. Credit matters are not easy at first, but your primary focus for over half that time is paying off your debt obligations. Think about the fact that you’re going to be debt-free.